Apple Bets Its Chips - InformationWeek

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Hardware & Infrastructure

Apple Bets Its Chips

Intel chips will give Macs some new zip. But Jobs still cares more about your living room than your office.

Now that Apple Computer has started using Intel chips, is it time for businesses to replace their Windows PCs with computers from the company that introduced personal computing to the world?

Probably not.

By using standard Intel chips in its computers, Apple is assured of an abundant supply of state-of-the-art silicon at commodity prices. It also means that its Macintosh computers can keep pace with Windows machines as Intel keeps improving processor performance. And by rolling out Intel-based computers last week, six months ahead of schedule, Apple avoids a slowdown in sales, as customers won't be waiting around for the new models.

For Apple users, the news is all good: The new computers using Intel's Core Duo dual-core chips offer two to five times the performance of previous Apple computers. And Apple is selling the PCs for the same price as its older, slower computers. Retooled iMacs, available now, go for $1,299 and $1,699, depending on processor speed, and new MacBook Pros, successors to the PowerBook G4 and due next month, will run $1,999 and $2,499.

Apple's Jobs (left) with an Intel silicon wafer and Intel's CEO, Paul Otellini, at Macworld.

Apple's Jobs (left) with an Intel silicon wafer and Intel's CEO, Paul Otellini, at Macworld.

Photo by Reuters
The new iMac has the same design, the same size, the same features, and the same price; the big change is speed, Apple CEO Steve Jobs told attendees at the Macworld conference in San Francisco last week. By the end of the year, the company's remaining desktop computers, consumer portables, and servers also will have Intel inside, abandoning the Power PC chip from IBM and Freescale Semiconductor Inc.

But for companies that mainly use Windows computers, the faster Intel-based Macs don't provide many reasons to make a quick switch to new hardware and a new operating system. The reasons most businesses don't use Macs--insufficient software availability, compatibility, and interoperability--won't disappear simply because Apple switched processors.

David Frederickson, program director for defense contractor Northrop Grumman Corp., has long used Apple computers at home. But the company's move to Intel processors probably won't change the computer systems Northrop buys, mostly because government contracts generally require the use of Windows.

"The current version of the Mac OS is far superior to the Windows OS as far as the user interface and the security you can set up," he says. "But the type of chip in the system isn't the deciding factor. It's basically the operating system and functionality they wrap around it."

That means Apple is unlikely to increase its share of the business market any time soon. But the "halo effect" of the spectacularly popular iPod and Apple's easy-to-use digital-lifestyle computer software, along with the move to Intel chips, may help the company grab more of the consumer market. Apple's share of the worldwide PC market hovers at 2% to 3%.

Increased Sales

Apple is starting to gain some ground. It sold 1.25 million Macs during the last three months of 2005, up from 1.05 million a year earlier. That increase helped fuel record quarterly revenue of $5.7 billion, though most of the growth came from sales of 14 million iPods, up 10 million units from the same period a year ago.

Apple continues to care a lot more about consumers than businesses. Last week, Jobs also revealed upgrades to Apple's consumer content-creation suite, iLife '06, and its presentation and productivity package, iWork '06. ILife '06 includes new versions of iPhoto, iMovie, iDVD, and GarageBand, along with a new app, iWeb, a Web-site creation, blogging, and podcasting program tied to Apple's .Mac Internet hosting service.

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